19-12-2004 21:36									#181
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Generally, you should invest no more than 5%, 10% at the most, of your savings in higher-risk investments... "throw away" money, if you prefer.

So, if you are going to invest 500 Euros a month, you should put no more than 50 of them in those "high-quality" Lithuanian bonds that Saras was trying to palm off me earlier this year.

And remember: money isn't made when you sell, but when you buy.

	19-12-2004 22:33									#182
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Sounds like a reasonably good advice. Thanks, I'll be sure to keep that in mind

	20-12-2004 02:46									#183
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quote: Originally posted by David Floyd I'm gonna share an irrelevant observation about meeting women, as it relates to me and a couple of good friends I know - meeting women comes in spurts. 6 months ago, I probably met a couple of women a week (in the context of either getting a number/date/whatever). Right now, I'm hardly meeting any, but that's not a problem because the pendulum swings back and forth all the time (and frankly it's a good thing because I'm way too busy at work to do anything other than have a random hook up once in a while).

I think that is typical for how it works with most people. Women come in spurts and I'm still not sure why that is other than crazy esoteric observations and explanations.

	20-12-2004 02:47									#184
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quote: Originally posted by JohnT Generally, you should invest no more than 5%, 10% at the most, of your savings in higher-risk investments... "throw away" money, if you prefer. So, if you are going to invest 500 Euros a month, you should put no more than 50 of them in those "high-quality" Lithuanian bonds that Saras was trying to palm off me earlier this year. And remember: money isn't made when you sell, but when you buy.

That's pretty solid advice.

Money management is the key to making money investing. It lets you make mistakes so you can try again. When you throw in everything at once, if you make one mistake, you may learn from that mistake, but you can't try again if your money is all gone!

	20-12-2004 03:04									#185
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JohnT's financial advice is not solid. I wish someone had explained this to me when I was your age, but here is the real deal:

1) Save as much money as you can in your youth. Savings in your youth will give you more money in your old age than twice that amount of savings when you are nearing retirement. Compounding is amazing.

2) You want a portfolio mix that maximizes return while minimizing risk. In the US, historically, this has been a mix of about 25% cash, 33% bonds, and 42% stocks. At least 1/3 of the stocks should be international. For your case, 1/3 of the stocks should be in companies based outside the Eurozone. Use the lost cost index funds that you can find for the bonds and stocks. Use the highest interest rate money market funds for the cash.

3) And this is the really important part. You need to regularly rebalance your portfolio to maintain the above percentages. You should do this at least once a year, and if you have a means that can minimize the transaction fees, as often as once per quarter. Rebalancing forces you to sell high and buy low. In fact, there are target year retirement funds available now that do steps 2 and 3 automatically for you.

	20-12-2004 03:05									#186
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quote: Originally posted by Ted Striker Women come in spurts

In my experience, it is men who come in spurts....

	20-12-2004 03:07									#187
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Well pchang, it really depends on what your goals are.

Your advice is what I do with my 401K. I diversify it and keep money in funds that are safe but make money.

I also have a riskier account, with proper management, you can take chances.

So I think a mix of the two are the best.

	20-12-2004 03:08									#188
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quote: Originally posted by pchang In my experience, it is men who come in spurts....

	20-12-2004 03:09									#189
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Riskier stuff is pure gambling. It is not much different than playing poker, going to the casino, or buying lottery tickets.

If you really want to hit a home run, your best bet is to gamble on yourself. Use your savings to start your own business.

	20-12-2004 03:11									#190
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Yup, I do agree

I invest the bulk of money money the way you have laid out

I do think it may be important to have a bit of play money on the side though to satisfy that gambling urge when it comes to investing

	20-12-2004 03:13									#191
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What? Is pchang gay too? Oh man, this is the gay conspiracy I KNEW IT WAS TRUE ALL ALONG!

Anyways, so what you suggest is that in fact I should be saving more in cash for now, and then later on push that money on bonds and stocks?

Where does that third of investments should be abroad? Is that to secure the chance of local zone going bunkers, so you'd end up wiht at least something? What I'm looking at is active portfolio. Not a .. a portfolio like a trustfund, but a portfolio that changes and expands. I'm not looking for quick sells, I'm looking to buy buy and buy and IF necessary, sell the bad stocks away before they start going to the rock bottom. I figure it's better to own that way than in cash. And then later on I'd like to buy some land or real estate. But we'll see..

The fees and taxes in here are also pain in the butt, so buying and selling is not a great idea for quick buck. They also tax you like bastards, taking that into account when calculating your net worth (when taxing) so they're POS people, jealous commies.

	20-12-2004 03:18									#192
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Pekka,

The best way is to have a program that takes money out of your paycheck, that way you don't have to think about it, or you don't spend the money you are trying to save.

You could have that money going directly into an account that invests in stock and bond funds.

In the US, we call it a 401k.

It works out pretty good.

	20-12-2004 03:20									#193
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That's basically what you call saving.

While that's the thing I need to be doing, the thing I really need to be doing is make it grow. Now with these percentages you get on bank, it's basically no worth unless you have big bucks. So while I'm not expecting to do lots of high risk investments, I'm expecting to do moves that actually gives some return.........

	20-12-2004 03:24									#194
	Help yourself to an AD-FREE life

Well, the 401K that I'm in has made me some really good returns this year.

If your employer doesn't have a 401K, there are probably other investment programs that you can do on your own that are similar.

We have something you can do on your own called a Roth IRA.

	20-12-2004 03:25									#195
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No. No. No.

Save as much money as you can as soon as you can. Period. Saving when you are 20 is more than twice as effective as saving when you are 40.

Invest what you save in money market funds (25%), a broad bond index fund (33%), and a broad stock fund that has one third of its assets based outside the Eurozone (42%).

You could also invest in 2 stock funds. A broad Eurozone Stock fund (28%) and a US/Asia stock fund (14%).

As time goes by, you will discover that the percentages of your portfolio will deviate from this because its parts will experience different rates of return. In order to maintain your percentages, you will have to sell the ones that have done well recently, and buy the ones that have done poorly recently. If you are continuing to save money, you could just make sure to buy more of the underrepresented assets with future money (this is one strategy to avoid transaction costs). The key is that rebalancing (or buying what you are low on) causes you to sell high and buy low. Almost all individual investors make the mistake of buying high and selling low.

	20-12-2004 03:29									#196
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Well, yeah

	20-12-2004 03:32									#197
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Aaahh.. I misunderstood you the first time.. I thought you meant that I should save it all in cash. That's why I thought it was little weird.

Now I'm getting to see this whole balancing thing.. hey, it sounds like a good idea. I'm trying to learn these things, I'm not very good at this, sorry. But I'll be good I just need to learn and follow these things closely.

You and JohnT as well seem to know about these things. What would you (JohnT's answer is also appreciated and everyone elses too) suggest I start doing as .. my personal learning process? Maybe I should look into other methods and models of forming a portfolio, so then I would truly understand this one better. I should be reading on some papers, shouldn't I? What would you suggest would be the best paper to be reading on regularly? right now I just know the basic moves and how it works basically, but I don't have any superior knowledge, just the average Joe knowledge. And we all know that won't get me anywhere.

	20-12-2004 03:38									#198
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My last post was for Pekka's benefit. He doesn't seem to really get it yet. As for Striker, consider the following:

Automatic car wash franchise.
Start up costs ~ $400,000 (more if real estate is expensive in the area)
Potential gross income: $100,000 / year.
Potential expenses: $20,000 / year.
Amount of work required: 10 hours a week to empty the cash, refill the expendables (soaps and such), and routine maintenance.

You can roll your 401K into an IRA, and have the IRA invest in the business.

Such an idea appeals to me, but my retirement savings haven't reached a high enough level yet to do something of this sort. I have explored businesses and franchises, but at my level, they all require significantly more work than 10 hours a week.

	20-12-2004 03:42									#199
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Start learning here. http://flagship5.vanguard.com/web/p...icOverview.html

It is US-centric, but the general principles hold for everyone.

	20-12-2004 03:52									#200
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quote: Originally posted by pchang My last post was for Pekka's benefit. He doesn't seem to really get it yet. As for Striker, consider the following: Automatic car wash franchise. Start up costs ~ $400,000 (more if real estate is expensive in the area) Potential gross income: $100,000 / year. Potential expenses: $20,000 / year. Amount of work required: 10 hours a week to empty the cash, refill the expendables (soaps and such), and routine maintenance. You can roll your 401K into an IRA, and have the IRA invest in the business. Such an idea appeals to me, but my retirement savings haven't reached a high enough level yet to do something of this sort. I have explored businesses and franchises, but at my level, they all require significantly more work than 10 hours a week.

3 of my coworkers have actually started their own businesses. 2 of them are doing well.

The other one is doing alright but I think he always underestimates the time committment.

	20-12-2004 03:54									#201
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Really though, just do what I said in the previous post. There is no reason to learn any more than that.

	20-12-2004 03:56									#202
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you see, you americans have the business down at young age... in this POS commie country it's illegal to make money so I have to learn everything in dark after midnight and be alert if the mind police come and shoot me with tazers and nipplegrinders.

But this is interesting, I'm currently reading few businesses (domestic) who manage your portfolio, I mean they invest for you, what is it in english... like funds, yeah? Pretty interesting.. some of these are really succesful. But then again you need big bucks to get these better services from them. Anyways, I'm about to get into pchangs link. Damn it this 'ohh pure nature and country side, aah look at the little puppies' country. I need to get PAID!

But then again, I lack your brain fat cells and short atteniton span and immidiate rewarding system so I have determination, motivation, passion, confidence and sisu. I'll make this work for me. I have already started (5 minutes ago).

	20-12-2004 03:58									#203
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quote: Originally posted by Pekka I need to get PAID!

I wasn't aware Finland made it illegal for its workers to get paid.

	20-12-2004 03:58									#204
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There are very good portfolio modelling tools available. But, I think you would have to pay for them. I get them for free because I am a high roller.

	20-12-2004 03:59									#205
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quote: Originally posted by Spiffor I wasn't aware Finland made it illegal for its workers to get paid.

Yes, it's that evil.

	20-12-2004 04:03									#206
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spiffor, well they did. Look at our GNP.

pchang, oh you're a player then? That's good to know, so you're not just a .. man of theory . What do you think of this pchang, I mean this is advertising so it's .. it's like that but there are these funds that say they have average return of 19% in 3 years, basically they are higher right now, but that's what they average.. I can't see lower profits in their results as they are up to date all the time, they are up in there and the longer in time they go, the higher the profit goes, there is this oen program with them that has gotten 37% profit in one year already. The poitn is they seem to be good at long term. I'm not saying I'm putting any money to these guys, I learn it all first so I know what I'm doing and who I'm trusting my money with but just to say, is this good thing or not in general?

They kind of need bigger investments though, so they don't take no penny pandlers, but that doesn't really bother me, I mean quality services costs more. I'd rather trust my money with quality service than save in the wrong places.

	20-12-2004 04:08									#207
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3 years is not a long time in the investing world. You want at least a 10 year history. The standard deviation in the rate of return for stock funds is usually at least 20. You need at least 10 years of data to get a good average rate of return and standard deviation for the performance of a stock or fund.

	20-12-2004 04:11									#208
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No they have longer history, that's just their advertising campagn (19% in 3 years). Just to promote their few activities, of course there are lot of programs you can get yourself into.

	20-12-2004 04:11									#209
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Do you know what standard of deviation means in this case?

If a fund has an average rate of return of 9% and a standard of deviation of 20%, it means that in 68 years out of 100, the fund will have a rate of return somewhere between -11% and +29%. In 32 years out of 100, the fund will have either a worse rate than -11% or a better rate than 29%.

	20-12-2004 04:12									#210
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Men chase returns like we chase women. We are easily distracted by something that looks hot. Fund companies typically advertise the 3 year returns of their funds that have been doing well recently. These types of ads are surprisingly effective.